Software-as-a-Service accounting firm Xero is introducing some big changes for New Zealand customers in September, with new plans that'll cost more, while removing existing ones.
In an email to customers Xero said it's launching a new line-up of business plans and increasing the monthly cost of the current ones. The new plans and their target customers are Ignite for businesses starting out, Grow for self-employed and growing businesses, and Comprehensive with payroll for organisations with employees.
Xero also said it is enhancing the current Ultimate plan that will provide accounting, payroll and forecasting tools. Meanwhile, the existing Starter, Standard and Premium plans won't be sold after September but existing customers already on them will face price increases:
| Plan | Current monthly cost | New monthly cost |
|---|---|---|
| Starter | $33 | $35 |
| Standard | $71 | $75 |
| Premium | $94 | $99 |
| Ultimate | $105 | $133 |
The current monthly cost for the plans was last increased in September 2023, with Starter going up by $2, Standard by $5 and Premium and Ultimate plans becoming $10/month more expensive.
Come September, Xero GST Cashbook will no longer be sold, and the number of accountant and bookkeeper partner plans will be pared down to two, Xero Ledger and Xero Cashbook.
Xero said from 12 September, it intends to move existing plans to new plans in a phased approach with at least 60 days notice before the shift takes place. The migration will be completed by March 2025, Xero said. Customers can also move to the new plans themselves after September 12.
Add-ons such as payroll, projects and analytics will no longer be sold separately from September, Xero said.
Here are the new Xero plans that come into effect from September 12 this year, and their GST exclusive cost:
Xero called the new plans simplified and streamlined, with the new line-up having more key features.
The lowest-cost Ignite plan loses the ability to run payroll, Analytics Plus and Xero Projects add-ons, but is otherwise the same as the current Starter version; this also applies to the Grow plan, vis-a-vis the existing Starter one.
Xero Comprehensive will allow expenses and mileage for up to 5 people, up from just one in Premium currently, with additional users costing $5 per month. Comprehensive can also run payroll for up to five people, whereas for Premium this costs $10/month for one person and $1 per additional user.
Analytics Plus is included with Comprehensive, but Xero Projects can't be added on as is possible for Premium, at $10/month for one user, and $7/month for additional people. The enhanced version of Ultimate provides expenses and mileage for up to 10 people as part of the monthly subscription (up from 5 in the older version), with additional users costing $5/month.
Likewise, Ultimate enhanced runs payroll for up to 10 people to a maximum of 200, with each costing $1 over and above 10. Tracking projects for up to 10 people is also included, again up from 5 in the older version.
For the first half of its 2024 full financial year, Xero reported an operating revenue increase of 21% to $799.5 million, and earnings before tax rose 90% to $206.1 million. Net profit was up $70.2 million year on year, to $54.1 million. The SaaS accounting company claims 3.95 million subscribers, up 13%.
34 Comments
That will help inflation.
Our accountant will put prices up for their services due to their Xero costs, we will put prices up to cover the increased accountant costs and our Xero costs....
multiply those small increases in costs by all the businesses in NZ running Xero and on and up we all go!
Uh, is it really that inflationary? How much extra will customers pay to cover the $28 per month increase on a Xero ultimate plan?
I guess when everything goes up then sure, but the increases shouldn't compound/multiply. Supply chain prices are initially baked in, and any increases should track just that.
Assume 4 businesses in a supply chain have to put up their prices to cover Xero's new charge. They each pass on 10% of the monthly fees to the next business for their product or service. So the end user gets $42 of Xero costs. It's now $53.20. A 26.6% increase, which is coincidentally the % increase from Xero. No doubt our business community will kneejerk their prices by 26% citing huge inflation from Xero, so your point is valid.
A lot of business operators aren’t that precise with their overheads. The accountant wants an extra $30 a month, my mechanic has just gone up $20/hr. Damn that weekly shop didn’t go as far as it used to. It’s a cumulative effect. A monthly subscription is one of those withdrawals that you really notice, well that’s my finding. Time for an extra $2/hr hourly rate I say!
As someone who worked with a range of accounting software in various accounting firms and commercial enterprises, and could dig deeper into the functionality and workings of the software, Xero was never that great and probably one of the worse ones I worked with.
Probably ideal for the small business and self employed but didn't need to become the main software for accounting firms.
Too much power is given to these tech companies enabling them to impose alleged service upgrades with no significant benefit to the customer.
Actually I really like xero and understand they too have rising costs and high shareholder expectations...
My point is that prices are still rising.. I am getting emails re power, software, rates.. all driving my costs up a bit individually but added together its a lot. And belive it or not skilled staff are still in demand and salaries for skilled staff aren't falling anytime soon.
Xero to hike prices, with revamped plans
And the benefits of the cloud are...That's right, increasing prices.
No other benefits of being in the cloud that I can see...
Reliability, redundancy, a worldwide network of datacentres, access to higher level services that don't exist outside of the cloud, having someone else worry about hardware, high speed networking, physical security, cooling etc etc etc.
Put another way, do you buy pre-cut timber to build a house, or do you grow your own forest and operate your own sawmill?
Lol... How did we survive before the cloud?
It may benefit a few large corporations, but is ultimately just an added middleman needing to recoup costs. It's mainly the giant tech companies storing everyone's personal information that benefit. Reams of data that does nothing to improve standards of living. Does it actually improve anything or just add another layer of costs - environmental, resource use, etc.
It doesn't need to be forced on everyone. For example using my personal computer with enough local storage and suddenly Microsoft sends everything to the cloud. Did I ask for this? Did I demand this?
We were all sucked into the hype of novelty.
Compared to other accounting systems Xero is incredibly bad and cannot even account for staff working on certain days or for different hours so the holiday calculations are always, always complete trash fire bollocks. Removing the payroll functionality and charging more is far less features for more cost, oh and they still do zero bug fixing. Hey perhaps that's why they are called xero. Xero trust, Xero QA, Xero ethics
Doesn't understand that this is marketing-accounting trickery which relies on a baseload of fossil fuels and nuclear generation
The thing is that wind and solar are intermittent generators of electricity and server farms need to work 24/7 to deal with global demand. For instance solar generation is zero during the night. Therefore we immediately know that Amazon is lying through its teeth with its claims.
Not exactly - let's say they need 100MWh for their business to be 100% renewable. They invest in solar PV that generates 100MWh. 100% of their needs are supplied by solar during the day, and maybe some solar is exported to the grid. At night they import electricity from who knows what source, but their 100MWh needs have been covered by solar.
Yep - worse than a supermarket duopoly, for data feeds into accounting software we are effectively in a monopoly. These costs will just keep increasing until we get some real competition. For the majority of users the "added value" promoted for the increased costs are not relevant, more a reason for cost increase. Our organisation will now spend over $50k per month on Xero, when we meet with them they used to a customer focused organisation, now they are a sales focused organisation - there way or nothing else - with a smile. A new entrant providing the basics at a reasonable cost could make a killing, but as dominance increases so do the barriers to entry.
I am absolutely livid about this.
Back when I first got into business, I foolishly decided to spend $20/month on Xero rather than $800 to buy desktop accounting software. I now have three Xero subscriptions and am paying roughly $200/month, so my 40 month payback has become approximately four months.
Of my subscriptions, one needs Projects and so this change will cost $40/month more (and come with stuff I don't need). A second sub needs Payroll for six employees, and so again will jump by almost $40/month. The third will be the same price after the change. I'm going to go from paying $200/month to paying $300/month because Xero has decided they prefer licence tiers rather than addons.
I used to evangelise for Xero. Starting a small business is hard and cash is tight. Being able to get good accounting software for $20/month was awesome. Now if you're starting a small business then you're far better with HNRY than Xero. And despite the Xero software looking virtually identical to how it was ten years ago with much the same features, somehow the cost has gone up rather than down.
Personally I'm now experimenting with alternatives with Rekon being the leading contender. Moving will be a massive hassle, but I don't feel the cost of Xero stacks up any more.
Good luck with that. Wouldn't be surprised if xero have made it difficult to export their transactions and other accounting bits and bobs so it can be easily imported into another accounting software suits. The migration costs may be high for you requiring an accountant to re-arrange the export data so it becomes easily importable.
Sadly a lot of critical data is not able to be exported as I have discovered. E.g. employee data including leave, & critical info has to be manually copied out.
I already have payments and payroll reports but the leave allowances, tax details, student loan details, upcoming leave records etc will be all lost in Sept when Xero cancels the existing plans. Hence might as well take the opportunity to switch to other accounting software providers. Many have sales on now through to August with substantial discounts that even without the discounts will still save more then the 50$ extra Xero will charge.
This plan bait and switch Xero is how you lose customers. The GST as well on top of the massive plan $$ increases to retain the same functionality actually means the difference switching to another cloud accounting provider pays for the time taken in manual data capture and transfer. I might even just scrape some of the data from the forms via code.
Much of the historical records I already kept alternative soft and hard copies of also. Like those who learned via the Horizon post scandal my trust in solely using cloud accounting solutions is not high (just as well since Xero has never correctly done leave, PH and holiday pay). So I favor multiple forms of alternative record keeping that require low amounts of effort for everyone and can be used to cross check and verify information should an audit be needed.
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